The shadow of the Spanish Corralito

A few days ago, the Nobel Prize in Economics Paul Krugman predicted a banking corralito in Spain and Italy and the exit of the euro by Greece.

The Nobel Prize in Economics, Paul Krugman , believes that Greece's exit from the euro is "inevitable" and recommends countries such as Spain and Italy to refrain from initiating large public investments because they lack the necessary financing capacity.

“I hate to say it because it's like yelling 'fire' in a crowded movie theater. But there is no alternative. All the solutions that are being discussed do not serve to remedy the disaster ”, declared Krugman about the Greek case in an interview published this Sunday by the German magazine 'Der Spiegel' .

The exit of Greece from the single European currency will have as an immediate consequence the flight of capital from neighboring countries and the mass withdrawal of bank deposits, for which the European Central Bank will have to respond to this with an injection of liquidity, according to the American economist.

'Keynesian' dynamics

However, Krugman considered that, from a political point of view, the cases of Italy and Spain are "easier" to solve than those of Greece because in both cases " their problems have not arisen from the absolute irresponsibility " shown by the Athenian authorities, but recommended that neither country enter a "Keynesian" dynamic of "large public investments, because they could not be financed."

"The real decisions can only be taken in Frankfurt or Berlin," said Krugman, who nevertheless harshly criticized the current economic line set by German Chancellor Angela Merkel, based on austerity, a strategy that he called "zombie politics. ”. “The nature of the undead is to keep walking regardless of the damage they are causing. The same is true for a policy of containment of adjustments. For two years it is clear that it is not going anywhere and does not represent a model of success, ”he estimated.